Dar refuses to allow TCP to procure 0.3 million tons of sugar

Finance Minister Senator Ishaq Dar has reportedly refused to allow Trading Corporation of Pakistan (TCP) to procure 0.3 million tons of sugar from mills, on the plea that the national procurement agency would then require additional funds for fertiliser procurement.

Official documents available with Business Recorder reveal that the ECC was informed on June 27, 2013 that Ministry of Industries has been entrusted with the responsibility of keeping a watch over general price trends and supply position of essential commodities including sugar.

The Sugar Advisory Board (SAB) works out domestic requirement of sugar and makes suggestions to the government with respect to import/export of sugar. A meeting of the Board was held on May 29, 2013 to review the sugar stock position, prices, export statistics and procurement by TCP. All the stakeholders, including representatives from ministries of finance, commerce, national food security & research and provincial governments attended the meeting. The sugar stock position as on May 29, 2013 was as follows: (i) new sugar produced (December 2012 – May 2013) – 5.014 million tons; (ii) old stocks – 0.376 million tons; (iii) sold/ off-take (December 2012-May 2013) – 1.910 million tons; (iv) balance with sugar mills – 3.480 million tons; (v) TCP stocks (end May 2013) – 0.176 million tons; (vi) quantity to be exported – 0.459 million tons; ;(vii) stocks available for domestic usage – 3.197 million tons; and (viii) export quantity approved-actually exported = 1.2-0.741=0.459 million tons.

Ministry of Commerce has reported that total stock available with TCP as on 27th June 2013 is 0.126 million tons. The ECC was further informed that on November 30, 2007, the ECC of the Cabinet had decided that the upper limit of strategic reserves to be kept by TCP will be 500,000 tons which would be sufficient to meet domestic requirements of the country for one and a half months. This approval was based on monthly consumption of 0.33 million tons in the country.

It was also revealed that the amount of sugar available in the country is sufficient to meet domestic requirements till February 2014. However, the TCP stocks of 0.126 million tons are much lower than the requisite strategic reserves of sugar. TCP is responsible for providing sugar to Utility Stores Corporation (USC) and Canteen Stores Department (CSD). Moreover, in view of the coming month of Ramazan, the requirement of sugar is expected to register a sudden surge – to the extent of 0.1 million tons instead of 50,000 tons as normal monthly requirement. Accordingly, the Sugar Advisory Board has recommended that TCP may procure 0.7 million tons of sugar from domestic sugar mills. TCP added that it can procure only up to 300,000 tons in view of limited availability of resources. The Chairman ECC (Finance Minister), however, observed that liquidity will also be needed by TCP for additional procurement of fertiliser in the coming months. It was further observed that total available sugar in the country is sufficient to meet the sugar demand but expected depletion of stock to the extent of 100,000 tons during the month of Ramadan may be considered for procurement to maintain the current level of stocks.

The meeting observed that there has been a significant improvement in the production of sugar during the current financial year and sufficient quantity is available in the country. The meeting also noted that since there is no bar on export of sugar, therefore, it is important that the strategic reserves are maintained at a satisfactory level. However, in order to ensure that the price of sugar does not register any abrupt increase due to the government”s intended purchase from the domestic market, the purchase should be staggered in two phases, ie, 50,000 tons each.